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Issues: (i) Whether proportionate reversal of Cenvat credit attributable to inputs and input services used in the manufacture of by-products cleared without payment of duty was required. (ii) Whether Cenvat credit could be taken on invoices issued prior to 01/09/2014 within six months of the notification introducing the time limit.
Issue (i): Whether proportionate reversal of Cenvat credit attributable to inputs and input services used in the manufacture of by-products cleared without payment of duty was required.
Analysis: The dispute on reversal of credit for by-products was governed by the Tribunal's earlier view that Rule 6 of the Cenvat Credit Rules, 2004 was not applicable to such clearances for the relevant period. The same view had been affirmed in precedent relied upon by the Tribunal, and the later decision in Rajaram Maize Products was also noticed to explain the position before the insertion of the relevant post-01/03/2015 explanation.
Conclusion: The requirement to reverse proportionate Cenvat credit was held not applicable, and the demand on this count was set aside in favour of the assessee.
Issue (ii): Whether Cenvat credit could be taken on invoices issued prior to 01/09/2014 within six months of the notification introducing the time limit.
Analysis: The Tribunal followed its earlier decision holding that the six-month restriction introduced with effect from 01/09/2014 did not apply to invoices issued before that date, and that such credit remained admissible if taken within the permitted period from 01/09/2014. On the admitted facts, the invoices were prior to 01/09/2014 and the credit was taken on 18/09/2014.
Conclusion: The Cenvat credit was held to be correctly availed, and the denial of credit was set aside in favour of the assessee.
Final Conclusion: Both the denial of credit and the demand for proportionate reversal failed, so the impugned orders were set aside and the appeals succeeded with consequential relief.
Ratio Decidendi: For the relevant period, Rule 6 of the Cenvat Credit Rules, 2004 did not compel reversal of credit merely because by-products were cleared, and the six-month restriction introduced by notification could not be applied retrospectively to invoices issued before its commencement.
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